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    IMPQ October Monthly Report & Update

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    IMPQ Monthly Report
    • IMPQ was up 2.3% net of fees, outperforming the benchmark return by 1.8%.
    • It is a key goal of the Fund to demonstrate that there is no performance trade-off to invest with a focus on sustainability and ESG.  Since inception in May 2019, the Fund has delivered a 9.9% p.a. return net of fees, outperforming the benchmark by 10.1% p.a.
    • Positive contributors this month included 4D Medical (+35.9%), Limeade (+32.7%) and Resmed (+16.9%).
    • Negative contributors this month included Mesoblast (-39.8%), Mach7 Technologies (-15.3%), Calix (-11.7%) and City Chic Collective (-9.6%).
    Performance
    Month (%)Quarter (%)FYTD (%)1 Year (% p.a.)Since Inception* (%)
    eInvest Future Impact Small Caps Fund2.3%8.2%9.1%6.1%9.9%
    S&P/ASX Small Ordinaries Index0.5%4.7%6.2%-2.4%-0.2%
    Added value (detracted)1.8%3.5%2.9%8.5%10.1%

    ^Inception date was 23 May 2019. IMPQ returns are calculated using net asset value per unit at the start and end of the specified period and do not reflect the brokerage or the bid ask spread that investors incur when buying and selling units on the ASX. Past performance is not a reliable indicator of future performance.

    Better Future Highlights

    During the month we added CleanSpace Holdings to the portfolio.  CleanSpace designs, manufactures and sells respirators that are used for workplace safety in both industrial and healthcare settings.

    CleanSpace products were initially developed for industrial users – with the respirators designed to be low-profile, lightweight and re-usable compared to bulkier traditional products.  In 2018, CleanSpace launched a series of products directed at healthcare markets and the COVID-19 pandemic has accelerated the company’s push into the healthcare markets with the re-usable CleanSpace Halo respirator being a more robust solution than traditional surgical face masks.

    In industrial settings, the CleanSpace product is used to protect the respiratory health of workers, including from silica.  It is also pleasing to see that women are well-represented on the CleanSpace management team with both the CEO and CFO of CleanSpace being female – something that in our view should more frequently be the case.

    Fund Review

    IMPQ was up 2.3% net of fees, outperforming the benchmark return by 1.8%.

    It is a key goal of the Fund to demonstrate that there is no performance trade-off to invest with a focus on sustainability and ESG.  Since inception in May 2019, the Fund has delivered a 9.9% p.a. return net of fees, outperforming the benchmark by 10.1% p.a.

    Positive contributors this month included 4D Medical (+35.9%), Limeade (+32.7%) and Resmed (+16.9%).

    Negative contributors this month included Mesoblast (-39.8%), Mach7 Technologies (-15.3%) and Calix (-11.7%).

    4D Medical’s quarterly update was in line with expectations and the stock continued the strong share price performance from September.  Limeade also announced a solid quarterly update in which it maintained revenue guidance and announced improved EBITDA guidance as the company’s employee experience software business continues to navigate the challenges and opportunities that COVID-19 presents.

    Resmed released a positive quarterly update as demand for the company’s core sleep apnea products were less impacted by COVID-19 than expected.

    Healthcare software provider Mach7 Technologies was weaker after noting that the ongoing COVID-19 pandemic made it more difficult to predict when new client projects would commence.  There was no material news from Calix during the month.

    Mesoblast announced that US Federal Drug Administration approval for the company’s remestecel-L for the treatment of acute graft versus host disease had been delayed with the FDA recommending that Mesoblast conduct further trials. This was unexpected as the cancer drug expert panel that the FDA had convened to assess the product had generally been supportive of approval, and the FDA typically approves products in these circumstances.  As this development was inconsistent with our investment thesis we sold the Fund’s position after having generated good returns since the initial purchase.

    During the month we also sold out of Envirosuite and Janus Henderson Group.  We also reduced our holdings in 4D Medical, AUB Group, Limeade and Sims.  We reinvested some of the proceeds into New Energy Solar, Integral Diagnostics, IRESS and Equity Trustees.

    We added CleanSpace Holdings to the portfolio.  CleanSpace designs, manufactures and sells respirators that are used for workplace safety in both industrial and healthcare settings.

    CleanSpace products were initially developed for industrial users – with the respirators designed to be low-profile, lightweight and re-usable compared to bulkier traditional products.  In 2018, CleanSpace launched a series of products directed at healthcare markets and the COVID-19 pandemic has accelerated the company’s push into the healthcare markets with the re-usable CleanSpace Halo respirator being a more robust solution than traditional surgical face masks.

    In industrial settings, the CleanSpace product is used to protect the respiratory health of workers, including from silica.  It is also pleasing to see that women are well-represented on the CleanSpace management team with both the CEO and CFO of CleanSpace being female – something that in our view should more frequently be the case.

    At month end the Fund held 40 stocks and cash was 8.6%.

    For October, the weighted average Perennial-derived Environmental, Social, Governance and Engagement (“ESGE”) Score of the Fund was 7.2 which is 30% higher than the benchmark ESGE Score of 5.6.

    ESG Activity

    Our ESG activities during the month included:

    • We met with the Chair of Kathmandu (ASX: KMD). We discussed gender diversity on the board, human capital, the dilutive capital raise during COVID and promotion of the sustainability of the company’s products. After the call, the notice of AGM was released, including the remuneration report. We sent an email to the company requesting greater detail on the remuneration report going forward and expressed our preference to implement a say-on-pay vote for shareholders, which is not a requirement for companies with a primary listing in NZ.
    • A pleasing result from our engagements occurred during October with Blackmores (ASX: BKL). Early in the month we wrote to the company requesting that they appoint additional females to the board given they did not meet the minimum 30% gender diversity goal of the 30% Club (of which we are a member). Late in the month, the company announced board renewal including appointing a new female chairperson.
    • We met with the board of Integral Diagnostics (ASX: IDX). We discussed ESG at length including modern slavery, gender diversity, carbon emissions, staff turnover, succession planning, training and development, cyber security and remuneration.
    • New Energy Solar (ASX: NEW) announced the outcome of the company’s strategic review, the first stage of which is to seek expressions of interest in the company’s two Australian solar assets and we discussed the outcomes of the strategic review with the CEO. Topics included the performance of Australian and US solar assets and the steps the company is taking to reduce the discount to net asset value.

    This is analysis done on the Sustainable Future Trust portfolio as at Feb 2020 by the Sustainable Platform

    To read more about eInvest Future Impact Small Caps Fund (Managed Fund) ASX: IMPQ, click here.

    Interested in purchasing units in the fund? Contact your financial adviser or simply purchase via your online broker, and as always read the PDS for more information. This can be found here. 

    Past performance is not a reliable indicator of future performance. Please read the PDS prior to investing. This information is general in nature and is subject to the terms and conditions outlined here.